BOGOTA, COLOMBIA, November 28, 2007
— Colombia is a top reformer globally and the regional standout on the ease of doing business. The sixth-fastest reformer worldwide in 2006-07, the country sped up trade, enhanced investor protections, and eased tax burdens, according to
Doing Business 2008
—the fifth report in an annual series issued by the World Bank and IFC.
This is the second time that Colombia has been a top reformer—the first was in 2003-04. To mark the latest success, President Alvaro Uribe today hosted a special event in Bogota to highlight the country’s reforms over the past year. The findings of
Doing Business 2008
were presented by Michael Klein, World Bank-IFC Vice President for Financial and Private Sector Development and IFC Chief Economist.
But the Latin America and the Caribbean region as a whole is falling further behind other regions in the pace of regulatory reform. In 2006-07 it was the world’s slowest-reforming region. Overall, it saw 26 positive reforms, but also six changes that made countries less friendly to business. With the most negative changes, Venezuela slipped farthest in the rankings.
Colombia rose nearly 15 places in the aggregate rankings on the ease of doing business, to reach 66 out of the 178 economies surveyed in the report. “Colombia has clearly charted a path toward reform and enhanced competitiveness,” said Klein. “The report finds that equity returns are highest in countries with the most reforms. Investors are looking for upside potential, and they find it in these economies.”
Among the year’s reforms, Colombia passed a decree that strengthened investor protections. This expanded disclosure requirements for related-party transactions in listed companies.
Colombia also made great strides in easing trade, reducing the time it takes to export by 10 days and the time it takes to import by 15 days. By extending port operating hours and adopting more selective customs inspections, it reduced the time for port and terminal handling activities by three days. Among other results, Colombia extended operating hours at its ports, resurfaced the roads to them, reduced port congestion by reducing the number of free storage days, and introduced selective customs inspections of cargo.
Colombia passed a new law that instituted major changes to the tax regime. It introduced an electronic tax filing system, cutting the average time that businesses must spend on tax compliance each year by 188 hours, or 41 percent. It also progressively reduced the corporate income tax rate, from 35 to 34 percent in 2007 and to 33 percent in 2008.
“As Colombia aims at more reforms, areas to consider include simplifying business start-ups,” noted Sylvia Solf, a coauthor of the report. Colombia is ranked 88
th
globally on the ease of starting a business. “In spite of one-stop shops, entrepreneurs still have to go through 11 procedures and 42 days before legally operating a new business. Enforcing contracts, where Colombia is ranked 147
th
, is another possible focus,” she added. On average, it takes 34 procedures and over three-and-a-half years to settle a commercial dispute, at a cost that is close to 53 percent of the value of the claim.
Colombia’s reform efforts have been gaining momentum due to President Uribe’s government national policy to enhance Colombia’s competitiveness. An intergovernmental team across several ministries, including the Ministry of Trade, Industry, and Tourism and the Ministry of Treasury, has been working to implement the reforms noted in
Doing Business 2008,
among others.
This reform effort in Colombia goes beyond the government. It includes the Private Council for Competitiveness, the National Planning Department, local chambers of commerce, and the business community. Other participating stakeholders include academia, representatives of the different regions, and think tanks such as Fedesarrollo and Anif.
The event in Bogota also marked the global launch of the Spanish version of
Doing Business 2008
. More information can be found at
http://espanol.doingbusiness.org/
.
The top 10
Doing Business
reformers this year are, in order, Egypt, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. The following countries also made good strides, with three or more reforms: Armenia, Bhutan, Burkina Faso, the Czech Republic, Guatemala, Honduras, Mauritius, Mozambique, Portugal, Tunisia, and Uzbekistan.
Doing Business 2008
ranks 178 economies on the ease of doing business. The top 25 in the overall rankings are Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia, and Austria.
The top-ranked economies in Latin America and the Caribbean are Puerto Rico (28), Chile (33), St. Lucia (34), Antigua and Barbuda (41), and Mexico (44). The rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. Since 2003
Doing Business
has inspired or informed more than 113 reforms around the world.
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Online Media Briefing Center:
Journalists can access the
Doing Business 2008
report through the World Bank Online Media Briefing Center at
http://media.worldbank.org
. Accredited journalists who do not already have a password may request one by completing the registration form at
http://media.worldbank.org
.
The Doing Business project is based on the efforts of more than 5,000 local experts – business consultants, lawyers, accountants, government officials, and leading academics around the world, who provided methodological support and review. The data, methodology, and the names of contributors are publicly available online at
www.doingbusiness.org
.
